Housing affordability has continued to worsen over the past year, with first home buyers needing 4.5 years to save for a house deposit.

The second annual Bankwest “First Time Home Buyer Report” also found thousands of young Australians have been forced to rent or live at home with their parents for an extra 10 months as they struggle to pull together a house deposit.

The research shows a first time buyer couple needs to raise an $85,800 deposit to purchase the median house, and $76,900 to buy a median unit.

There are 26 Local Government Areas (LGAs) – in Sydney, Melbourne and Perth -where it would take a first home buyer couple on average earnings more than a decade to save a house deposit.

Bankwest Retail Chief Executive, Vittoria Shortt said this was the stark reality of a strong Australian property sector.

“Increasingly we are seeing an entrenched two-speed market emerging with property owners on one side and a growing army of first home buyers seemingly locked out on the other,” Ms Shortt said.

Ms Shortt said first time buyers needed on average four-and-a-half-years to get together a conservative 20 per cent house deposit. This drops to four years for first time unit buyers.

The report -which analyses data from 544 local government areas across Australia – reveals the amount of time needed to secure a down payment for a house has risen by almost 10 months since this time last year.

The research, part of Bankwest’s on-going Financial Indicator Series, examines how long it takes the average first time buyer couple to save for a 20 percent deposit. This is based on setting aside one fifth of their combined pre-tax income annually, and includes available federal and state government first home owners’ grants.

”Australia’s booming property market is a double-edged sword,” Ms Shortt said.

“While it’s clearly of enormous benefit to established home owners it’s the complete opposite for many of their children. Many potential first home buyers are facing long periods in the rental market.

“The situation has deteriorated even further now that first home owners’ grants have been wound back to their original pre-GFC levels and house prices have risen.

“The cold reality is that thousands of young Australians are finding themselves ensnared in a rental trap.

“Our research shows a 25 year old couple hoping to buy a home will be almost 30 when they actually achieve that goal. It now takes longer to save for a house than it does to complete some university degrees.”

Ms Shortt said Sydneysiders are the hardest hit and need to save more than six years before they can buy their first house. In the suburb of Mosman it takes almost a quarter of a century for a young couple on average earnings to squirrel away the $471,900 required for a deposit.

“When it comes to units, Melbourne has overtaken Sydney to be the most unaffordable,” she said. “Melbourne buyers spend 4.3 years saving for a deposit.

“Even in the middle ring suburbs, about 15 kilometres from the CBD, some first time buyers need six years to save a deposit for a house and four years for a unit.”

The affordability crisis has forced many first time buyers in capital cities to settle for a unit rather than a house, because it would save them more than a year of renting. In Sydney, it would shave two years off the time taken to save for a deposit.

“The shortest time nationally to save a deposit is in Adelaide -4.2 years and 3.1 years respectively for a house and unit.”

Interesting facts:

• In the past year, the time needed to save a deposit has increased in every capital city.
• In the Perth area of Peppermint Grove, it would take 42 years to save a 20 per cent deposit – the longest in the country.
• In the north-west NSW area of Brewarrina, it would take two and a half months to save a 20 per cent deposit – the shortest amount of time in the country.
• There are 11 LGAs where it would take the same, or less time to save for a deposit for a house compared to a unit (mostly in NSW & QLD)

Data for the First Time Buyer Deposit Report is derived from the Australian Bureau of Statistics Census (2006), the ABS Wage Cost index with house prices from Residex.

Bankwest’s researchers analysed local incomes of potential first time buyers – measured by census data on incomes of 25-34 year olds – along with local house and unit prices.

A full list of results for all 544 LGAs across Australia is available in the Bankwest First Time Buyer Report 2010 and at www.bankwest.com.au.

Media enquiries:

Adrian Bradley, External Communications Manager, Bankwest, 0427 674 851

adrian.bradley@bankwest.com.au

Elvina Simpson, Media Relations Manager, Bankwest, 0457 532 191

elvina.simpson@bankwest.com.au